Broadband ISP Cox Will Now Charge You $50 More To Avoid Usage Caps, Overage Fees

from the thanks,-competition dept

We've noted repeatedly how large ISPs for years have happily abused the lack of competition in the broadband market by imposing arbitrary, unnecessary and confusing usage caps and overage fees. While ISPs had tried for a while to suggest these caps were "only fair," or necessary due to congestion, repeated debunking of those excuses forced the ISPs a few years back to finally stop pretending there's any good reason for these limits.

These days, ISPs don't even give coherent reasons for the limits, because they know caps are about one thing: abusing a lack of competition to raise rates and protect TV revenues from streaming video competition. More importantly, they know that thanks to this limited competition, there's nothing you can do about it either way.

Cox Communications is one of several cable providers that have taken full advantage of the reduction in competition by telcos to drive up rates via usage caps and overage fees. Back in June, Cox announced it would be imposing usage caps of one terabyte, then charging users $10 for each additional 50 GB of data consumed. And this week, the company unveiled the other arm of the company's ingenious plan -- charging its users $50 more per month if users want to avoid usage caps entirely:

"A memo being circulated among employees on the changes downplays the impact of these restrictions on consumers, repeatedly trying to argue that confusing and unnecessary usage limits aren't a big deal because the majority of Cox customers won't run afoul of them...today.

"An overwhelming majority of data is consumed by a very small percentage of internet users," the memo reads. "The new choices are great options for the small percentage of heavy users who routinely use 1TB+ per month and prefer a flat monthly rate, rather than purchasing additional data blocks.".

If it's truly only a "very small percentage" of users causing problems with "excessive" usage, Cox could have simply pushed these users to business-class tiers. Instead, they made the conscious decision to impose confusing new rate hikes on all users, feebly trying to insist that this can't possibly impact their consumption. And while it might be true it won't impact consumption today that's not really the point. Once caps are imposed, ISPs can tighten the noose at their discretion. And in a few years, when 4K video streaming and other new high-bandwidth applications emerge, ISPs have a wonderful new way to raise rates on a consistent basis.

But consumers realize they're being screwed, which goes a long way toward the cable industry's utterly abysmal customer satisfaction ratings. In just a few months, Cox imposed pricey and confusing new surcharges knowing a lack of competition would let them get away with it. They then offered users the "option" to pay $50 more just to enjoy the kind of unlimited connections they had last year -- for notably less money.

It's a wonderful racket, and one regulators at the FCC and elsewhere (regardless of political party) have pretty consistently made abundantly clear they couldn't give two shits about. And while many people reading these reports get bogged down over whether one terabyte limits are fair, that misses the entire point. There's no technical reason to impose these limits in the first place. They're glorified rate hikes, poorly justified, shoveled on the backs of captive users who already pay more for bandwidth than users in most developed nations. All thanks to a broken market very few people seem all that interested in fixing.

Filed Under: data caps, fees, overage fees, usage caps
Companies: cox

Charter's Trying To Kill Recent Merger Conditions Banning Usage Caps, Net Neutrality Violations

from the pay-more-money-for-the-same-product dept

For decades now the FCC has been an expert at imposing utterly meaningless merger conditions. Usually these conditions are proposed by the companies' themselves, knowing full well these "demands" are utterly hollow -- and FCC punishment for ignoring them will be virtually non-existent. The end result has been a rotating tap dance of merger conditions that sound good upon superficial press inspection, but wind up being little more than hot air. It's a symbiotic relationship where as the telecom sector consolidates (often at the cost of less competition) the FCC gets to pretend it's not selling consumer welfare down river.

But last year something weird happened.

When Charter proposed its $79 billion acquisition of Time Warner Cable and Bright House Networks, former FCC boss Tom Wheeler brought in net neutrality advocate Marvin Ammori to help hammer out conditions that wound up actually being meaningful. Under the deal, Charter was banned from imposing usage caps, engaging in interconnection shenanigans with content providers like Netflix, or violating net neutrality (even if the rules themselves were killed) for a period of seven years. Charter was also required to expand broadband to 2 million additional locations.

Not too surprisingly, broadband providers and the new incumbent-cozy FCC are getting right to work trying to eliminate those conditions entirely. New FCC boss Ajit Pai is circulating an order that would kill requirements that Charter overbuild into competing ISP territories, something demanded recently in a letter to the FCC by the American Cable Association. As is kind of telecom sector status quo, smaller cable companies say they'll take their investment ball and go home if the threat of additional, regulator-mandated competition isn't eliminated:

"To respond to growing consumer demand for increased bandwidth, all of us have been planning to upgrade the electronics on our networks and to deploy more fiber closer to customer locations over the next five years (the lifespan of the overbuild condition). Many of us have been planning to extend our networks to serve communities adjacent to our current service territories. But we have been forced to reconsider, scale back, or halt these investments in the wake of the Commission’s order."

Of course that's not how competition works, and companies believing they get to choose when you upgrade their networks speaks to the level of competition these companies already see. Elsewhere, broadband industry-funded think tanks like the Competitive Enterprise Institute (CEI) are also pushing Pai to kill off the usage cap ban, trotting out the long-standing industry claim that usage caps are all about fairness:

"...the Order requires New Charter to refrain from imposing “data caps” or setting "usage-based prices" for its residential broadband Internet access services for seven years after the transaction closes. Given that “the record makes clear that online video places enormous demands upon the networks of Charter and Time Warner Cable and increases their capital costs,” Commissioner Pai asked a simple question in his dissent: “Who should bear those costs?" Because the Order concludes that “all customers must do so equally,” New Charter’s natural response to this condition “will be to increase prices on all consumers in order to amortize the cost of serving a bandwidth-hungry few."

Granted if you've been paying attention to the usage cap debate, you realize this is a stale canard. Industry executives have acknowledged that caps have nothing to do with network management, and aren't an effective way to police network congestion anyway. As any earnings report highlights, caps aren't a financial necessity either, since flat-rate broadband has been incredibly profitable for the industry for years.

What usage caps are is a price hike imposed on uncompetitive markets. Granted they also help ISPs protect their TV revenues from the rise of internet video by penalizing competing streaming services, while letting the incumbent's own services sail through without penalty (aka zero rating). Anybody believing that imposing caps and overage fees on all users is really about making sure a few people "pay their fair share" should steer clear of swampland and bridge salesmen.

Granted Charter's latest merger has still proven harmful for consumers, who say the company has frozen broadband upgrades and raised rates dramatically in the wake of the megamerger. If consumer welfare were truly a U.S. telecom regulatory criteria the deal likely would have never been approved at all, but the cap condition specifically at least kept things from being arguably worse in the face of limited competition. If the FCC's looking to give a middle finger to the millions of customers impacted by this deal, killing the conditions -- and requiring these users pay even more money for the same service -- is a fantastic way to do so.

Filed Under: broadband caps, data caps, fcc, merger conditions, net neutrality, usage caps
Companies: charter, time warner cable

FCC Partially Kills Rules Requiring ISPs Be Clear About Usage Caps, Hidden Fees

from the all-about-helping-the-little-guy dept

FCC boss Ajit Pai made it clear that overturning net neutrality would be the new FCC's top priority (apparently right behind paying lip service to the poor), and his behavior is making it very clear that wasn't an empty promise. Pai recently killed the FCC's inquiry into Verizon and AT&T's zero rating, which lets both companies use arbitrary usage caps to give their own content an unfair market advantage. The previous FCC argued both ISPs were violating net neutrality and engaged in anti-competitive behavior. The new FCC, in contrast, now says zero rating "enhances competition in the wireless marketplace."

Now Pai's chipping away at the transparency portion of the FCC's net neutrality rules as well, insisting they're little more than "excessive reporting obligations." The transparency requirements, originally passed in 2010, required that ISPs make the following items perfectly clear when selling service to consumers:

Price -- the full monthly service charge. Any promotional rates should be clearly noted as such, specify the duration of the promotional period, and note the full monthly service charge the consumer will incur after the expiration of the promotional period.

Other fees -- all additional one-time and/or recurring fees and/or surcharges the consumer may incur either to initiate, maintain, or discontinue service, including the name, definition, and cost of each additional fee. These may include modem rental fees, installation fees, service charges, and early termination fees, among others.

Data caps and allowances -- any data caps or allowances that are a part of the plan the consumer is purchasing, as well as the consequences of exceeding the cap or allowance (e.g., additional charges, loss of service for the remainder of the billing cycle)."

The FCC estimated that it should take ISPs about 6.8 hours per year to adhere to these requirements, which have an obvious benefit to consumers. But because some ISPs repeatedly complained that the requirements were "too onerous" (without ever really supporting that claim with data), the FCC temporarily exempted ISPs with fewer than 100,000 subscribers from the rules. But last week, the FCC not only extended the rules, but expanded them claiming this would let ISPs "allocate scarce resources toward expanding modern networks that bring economic opportunity, job creation and civic engagement to all Americans."

But lone dissenting FCC commissioner Mignon Clyburn was quick to point out that under the surface, this had little to do with helping small ISPs (again, given the small burden of 6.8 hours in extra work per year), and everything to do with slowly-but-surely rolling back oversight of larger companies utilizing smaller holding companies:

"Many of the nation’s largest broadband providers are actually holding companies, comprised of many smaller operating companies," Clyburn said. "So what today’s Order does is exempt these companies’ affiliates that have under 250,000 connections by declining to aggregate the connection count at the holding company level."

The original exemption for ISPs with 100,000 or fewer subscribers was applied to the aggregated total of subscribers "across all affiliates," so that small ISPs owned by big holding companies wouldn't be exempt. That changed today, according to Clyburn.

Consumer group Public Knowledge quickly issued a statement questioning the wisdom of making often convoluted and misleading broadband bills more difficult to understand:

"Yet again, Chairman Pai has acted to weaken consumer protections at the FCC. Today’s action means that more ISPs could withhold essential information about their broadband pricing and service, making it harder for many more subscribers to make informed decisions and hold their providers accountable. How can it be good for consumers if companies conceal anything about the price, speed, and data caps for their broadband service?"

If you hadn't noticed already, easing government and public oversight of one of the least popular and least competitive markets in America -- then pretending it's either for the poor or for "modernization's" sake is new FCC boss Pai's modus operandi. It doesn't matter whether we're talking about Pai's decision to help prison telco monopolies overcharge inmate families, his decision to kill plans for more cable box competition, or the recent efforts to dismantle net neutrality piecemeal, this is all being set to the backdrop of bogus empathy for the little guy. And this is just his first month in office.

As we noted previously, Pai won't repeal net neutrality via FCC process because it would open the door to a public-comment period during which his decision would be quite-justly lambasted. Instead, the plan is to chip away at the rules bit by bit until the GOP pushes either a Communications Act rewrite or other legislation that puts net neutrality -- and likely the FCC's entire authority over broadband ISPs -- to bed permanently. If you really like the end result of having large ISPs and revolving door regulators dictate internet policy (read: Comcast), you should be pretty excited about what the future has in store.

Filed Under: ajit pai, broadband, fcc, hidden fees, usage caps

Happy New Year From Comcast: Usage Caps, Rate Hikes, And More Sneaky Fees In 2017

from the innovation! dept

The Broadcast TV fee is moving from $5 a month to $7 a month, while the Regional Sports Network fee is rising from $3 a month to $5 a month, according to notices sent to customers in several cities. Combined, that's a change from $8 to $12 a month, giving Comcast an extra $48 a year from each customer that has to pay the fees.

Comcast began charging these fees a few years ago, and has increased them quickly. Just over a year ago, Comcast raised the Broadcast TV fee from $3 to $5 and the Regional Sports fee from $1 to $3. The two fees have thus gone from $4 to $12, combined, in little more than a year.

...The Broadcast TV fee was introduced in 2014, initially as $1.50 a month, and the Regional Sports fee was added in 2015 at $1 a month.

"We continue to make investments in our network and technology to give customers more for their money— like faster Internet service and more Wi-Fi hotspots, more video across viewing screens, better technology like X1 and a better customer experience. Unfortunately, the costs we are charged to carry popular networks continue to increase significantly, especially broadcast television and sports programming, which are the largest drivers of increases in price adjustments."

Filed Under: data caps, rate hikes, sneaky fees, usage caps
Companies: comcast

ISP Feebly Tries To Defend Usage Caps By Comparing Them To...Oreos

from the words-are-like-wind dept

"Ironically, those who think ISPs are greedy pigs or evil villains because they charge based on consumption through caps or usage-based pricing do not direct the same moral outrage toward edge providers who price their services in basically the same way. Netflix, for example, charges $7.99 a month for its “basic” subscription. A basic subscriber does not get unlimited usage of Netflix’s library for that price but, instead, is limited to videos in standard definition format and on only one screen at a time."

"Imagine you are out for a walk and experience a sudden, irresistible craving for Oreo® cookies. You only want to spend two dollars, which means that you will be able to buy a two-pack or maybe even a four-pack but for sure you cannot get the family size of over 40 cookies. For that many, you have to spend more. Of course, it would be nice if your two dollars bought you the right to eat an unlimited number of cookies, but you know that is not the way our economy works. It is the same for the Starbucks latte you might want to drink with your cookies and for socks, gasoline and just about every single one of the thousands of other products and services that are for sale in the United States, including essentials like water and electricity."

Filed Under: business models, choice, data caps, fcc, oreos, usage caps
Companies: mediacom, netflix

Netflix Urges FCC To Crack Down On Broadband Usage Caps

from the pay-more,-get-less dept

Data caps (especially low data caps) and usage based pricing ("UBP") discourage a consumer's consumption of broadband, and may impede the ability of some households to watch Internet television in a manner and amount that they would like. For this reason, the Commission should hold that data caps on fixed line networks and low data caps on mobile networks may unreasonably limit television viewing and are inconsistent with Section 706.

"Data caps on fixed line networks do not appear to serve a legitimate purpose: they are an ineffective network management tool. Fixed line BIAS providers have stated that data caps on fixed line networks to not serve a traffic management function. They have been described alternatively as a way to align customers' use of the network with what they pay. As a method of price discrimination however, data caps and UBP are redundant to the speed tiers that consumers are used to. Data caps and UBP raise the cost of using the connections that consumers have paid for, making it more expensive to watch Internet television. The Commission should recognize that data caps and UBP on fixed line networks are an unnecessary constraint on advanced telecommunications capability.

Filed Under: broadband, fcc, net neutrality, usage caps
Companies: netflix

Comcast Expands Usage Caps, Still Pretending This Is A Neccessary Trial Where Consumer Opinion Matters

from the pay-more-for-less,-you're-welcome dept

"We know customers want a carefree online experience that doesn't require them to think about their data usage plan, and we offer a plan that does just that...What can you do with a terabyte? Stream about 700 hours of HD video, play more than 12,000 hours of online games, or download 600,000 high-res photos in a month."

Filed Under: usage caps
Companies: comcast

Broadband CEOs Admit Usage Caps Are Nothing More Than A Toll On Uncompetitive Markets

from the pay-more-for-less dept

"The cost of increasing [broadband] capacity has declined much faster than the increase in data traffic," says Dane Jasper, CEO of Sonic, an independent ISP based in Santa Rosa, Calif.

Jasper, of course, has reason to challenge his much larger rivals. However, he also backed up his argument with real numbers. A few years ago Sonic (formerly Sonic.net) spent about 20 percent of its revenue on basic infrastructure. Since then, the cost of routers, switching equipment and other related gear declined so much that Jasper says the company's infrastructure costs are now only a bit more than 1.5 percent of its revenue.

For this reason, Sonic has no plans to impose data caps, according to Jasper.

"We want to make sure our products meet the needs of customers for what they want to do and it does not inhibit them or force them to make decisions on how they want to use the product. The nice part of technology and what has happened is that transport costs continue to decline and by putting in the packet optical fabric it takes away a lot of those constraints," McCarthy said. "There may be a time when usage-based pricing is the right solution for the market, but I really don't see that as a path the market is taking at this point in time."

"I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down."

Filed Under: broadband, broadband caps, competition, dane jasper, data caps, exaflood, price gouging, usage caps
Companies: at&t, comcast, frontier communications, sonic, suddenlink

AT&T's Broadband Caps Go Live This Week And Are The Opening Salvo In An All-Out War On Cord Cutters

from the tightening-the-noose dept

"We want to continue providing a great experience for our Internet customers so we’re giving U-verse® Internet customers more choices and more data, including an unlimited data option available to any U-verse Internet customer."

Filed Under: broadband, cord cutting, data caps, tv, usage caps
Companies: at&t, directv